An employee cleans a window at Apple Inc.’s new Canton Road store. In the Tsim Sha Tsui district of Hong Kong, China.
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Many of the largest technology companies are laying off employees as fears of a recession mount. But the job cuts come after a few years of rapid expansion.
Wednesday, Microsoft It announced that it would cut 10,000 employees, reducing its workforce by 5%, and Amazon began layoffs that would eventually cut 18,000 jobs.
Microsoft and Amazon join peers in the tech space including the alphabet And meta That has also led to staff cuts in recent months.
While every company is a little different, most companies that make layoffs blame macroeconomic conditions and the possibility of a future recession as the reason for their belt-tightening.
But the underappreciated factor is how quickly tech companies have increased hiring over the past two years.
In 2020, widespread Covid lockdowns have made internet applications more important to people, driving up turnover for many technology companies. With sales and profits still rising in 2021, they’ve continued to add massive numbers of employees with the hope that the success they’ve experienced will become a new foundation. It didn’t work out that way. Growth is slowing, and companies are now having to readjust.
Apple is a major exception: It hasn’t significantly raised hiring in the past two years, nor has it announced any layoffs.
A review of the SEC filings shows how quickly other top tech companies have grown during the pandemic.
Microsoft It had 221,000 full-time employees at the end of June 2022, the latest official number available. This was a jump of 40,000 employees from the same time in 2021, a 22% increase in headcount. In the year prior to that, Microsoft added 18,000 employees, an increase of 11%.
In a note about Microsoft layoffs, Wedbush analyst Dan Ives said the tech sector has had to spend money during the pandemic to keep up with surging demand.
“Redmond needed to staff aggressively with the rest of the tech sector and spend money like the Rockstars of the 1980s to keep up with the amazing demand,” Ives wrote in a note on Wednesday.
Amazon More complex than Microsoft due to the huge hourly workforce in its warehouses, in addition to the corporate office staff seen in most tech companies.
However, Amazon grew voraciously in 2021, adding 310,000 jobs. This followed an even larger expansion in 2020, when it grew more than 38% and added half a million employees.
Overall, Amazon reported 1.6 million employees as of the end of December 2021, of whom about 300,000 have corporate jobs.
An Amazon executive said its expansion during the Covid era was one reason for the cuts Wednesday, in a note to employees.
Doug Herrington, Amazon’s head of retail, said in a note obtained by CNBC. “While other companies may have shied away from short-term economics, we prioritized investing for customers and employees during these unprecedented times.”
meta (formerly Facebook) has grown by thousands of employees every year since going public in 2012, according to SEC filings.
In 2020, Meta added more than 13,000 employees, an increase of 30%, the largest hiring year in the company’s history. In 2021, it added another 13,000 workers. By total workers, that was the largest two years of expansion in Facebook’s short history.
the alphabet, Formerly Google, it didn’t cut as many positions as other large companies, but in recent weeks it has cut 240 positions at Verily, its health sciences division, and laid off 40 at Intrinsic, its robotics division.
But while Alphabet’s recent cuts have been much smaller than some other companies’, its growth has been similarly phenomenal.
In 2021, Alphabet added more than 21,000 employees, or a 15% increase for the year, to a total of 156,500 workers. In 2020, it added more than 16,000 employees, or roughly a 14% increase.
But that growth predates the pandemic, as Alphabet has increased headcount by at least 10% every year since 2013, and added more than 20% new employees in 2018 and 2019 as well.
an Apple It grew much slower during the pandemic. In fact, Apple’s hiring process over the past few years has followed the same general trend since 2016.
As of September 2022, Apple had 164,000 employees, including corporate employees and retail employees in its stores. But that was only up 6.5% from the same period in 2021, which represents real growth for 10,000 employees. Apple also hired wisely in 2020, adding fewer than 7,000 employees in the year prior to September 2021.
Correction: An earlier version of this story misspelled Doug Herrington’s name.